The Chase Sapphire Reserve is one of the most valuable transferrable point-earning cards on the market. However, Chase’s top card is far from perfect and is not for everybody. This post presents six reasons why you should not get the Chase Sapphire Reserve.
However, the Chase Sapphire Reserve is incredibly popular because of its excellent earning opportunities and sign-up bonus. The Reserve earns 3x Ultimate Rewards (UR) points per dollar on Dining and General Travel. Plus, it comes with a sign-up bonus worth 50,000 UR points that can be earned by spending $4,000 within the first three months.
You Are Over 5/24
The Chase 5/24 Rule is one of the most infamous and preventative Chase card application rules. It states that anyone who has been approved for five credit cards from any bank within the last 24 months will not be approved for a Chase card. Some people have gotten a lot of cards within the last two years and they cannot go for any Chase card, let alone the Sapphire Reserve.
High Minimum Credit Limit
Furthermore, the Chase Sapphire Reserve has a minimum credit limit of $10,000. That’s because it’s a Visa Infinite card. Conversely, Visa Signature cards come with minimum credit limits of $5,000. $5,000 is a huge difference for many people, especially those with limited credit and/or income. Thus, the Sapphire Reserve is a difficult card to get approved for just because of its Visa Infinite status.
High Annual Fee
The Chase Sapphire Reserve has a $550 annual fee, which was increased from $450 in January 2020. This fee is not waived for the first year and is on par with the American Express Platinum Card.
Many people argue that the card’s “net annual fee” is $190 after taking the annual $300 General Travel Credit and the $60 Door Dash credit into account. However, $190 is still a lot of money for an annual fee, especially for those who do not use Lyft.
Furthermore, adding an authorized user to the Sapphire Reserve costs an extra $75 per year per user. That is an easy way to increase your annual fee without knowing for many people. However, there are better options for those who want or need to add authorized users. You can add authorized users to the Chase Sapphire Preferred for no additional cost. Plus, the Sapphire Preferred has a much lower annual fee to begin with, despite being a weaker earner.
You Do Not Spend A Lot on Travel and/or Dining
The Sapphire Reserve’s two bonus categories are in Travel and Dining. And even though you will earn 3x UR points per dollar with this card, it takes a lot of spend every year to justify the annual fee. The Sapphire Reserve has the two credits to justify more than half of the card’s annual fee. But the remaining $190 must be justified via spend.
Break-Even Analysis for Pure Spending
The break-even analysis puts the Reserve head to head with the Chase Sapphire Preferred. It determines how much you need to spend on Dining and Travel per year to break even between both cards. If you spend less than the final number, the Sapphire Reserve is not the best card for you.
This break-even analysis assumes three things:
1) You will use the entire $300 annual General Travel credit for the Reserve
2) You will use the $60 annual Door Dash credit for the Reserve
3) UR points are worth 2 cents per point (CPP). If you feel that 2 CPP is not the right valuation, you can recalculate the last line with your own valuation. All you have to do is replace the $0.02 with your valuation and solve.
The math is as follows:
CSP = CSR
2x – 95 = 3x – 550 + 300 + 60
2x – 95 = 3x – 190
2x + 95 = 3x
95 = x
95 / $0.02 = $4,750
$4,750 is a lot of money for many people to spend on Travel and Dining, especially those who are just starting out. Therefore, the Chase Sapphire Preferred and the American Express Green Card have similar earning structures but much lower annual fees. And they are two great alternatives to the Sapphire Reserve for lighter spenders.
You Do Not Use Lyft
Chase recently forged a partnership with Lyft, which included the Sapphire Reserve getting a litany of Lyft benefits. This partnership is another way that Chase is competing with American Express, which has a partnership with Uber.
These benefits include Lyft Pink membership. Chase values the latter at $199 for one year of membership, thereby justifying its annual fee increase on the Sapphire Reserve. However, some people use Uber, traditional taxis, or other ridesharing services instead of Lyft. And others do not use ridesharing services at all, rendering these perks useless.
You Own a Business or Have a Side Gig
Moreover, the Chase Sapphire Reserve is not the best Chase UR-earning card for you if you own a business or have a side gig. That honor goes to the Chase Ink Business Preferred, Chase’s top business credit card.
The Ink Business Preferred has a $95 annual fee and earns 3x UR points in six different categories. One of those categories is General Travel. The other five are common business expenses including Shipping, Phone Services, and Internet Services.
Plus, the Ink Business Preferred has a better sign-up bonus than the Sapphire Reserve. You can earn 80,000 UR points by spending $5,000 within the first three months with the Ink Business Preferred. This is 30,000 more points than the Sapphire Reserve offers for an additional $1,000.
The Chase Sapphire Reserve is a great card. But it’s not for everyone. And the six reasons presented above are why you should not get the Sapphire Reserve. Many people love the Sapphire Reserve because of its earning structure, sign-up bonus, and perks. But there are better options in all of those sub-categories for certain travelers.